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CIRCULAR

Guiding a number of contents of the Government's Decree no. 12/2006/ND-CP of January 23, 2006, detailing the implementation of the Commercial Law regarding international purchase and sale of goods and activities of purchase and sale agency, processing and transit of goods with foreign parties

Pursuant to the Government's Decree No. 29/2004/ND-CP of January 16, 2004, defining the functions, tasks, powers and organizational structure of the Trade Ministry;

Pursuant to the Government's Decree No. 12/2006/ND-CP of January 23, 2006, detailing the implementation of the Commercial Law regarding international purchase and sale of goods and activities of purchase and sale agency, processing and transit of goods with foreign parties,

The Trade Ministry hereby guides a number of specific contents in furtherance of above-said Decree No. 12/2006/ND-CP as follows:

I. RIGHT TO CONDUCT IMPORT AND EXPORT BUSINESS

1. Traders without foreign direct investment capital (hereinafter referred to as traders for short), including:

- State enterprises and enterprises established under the Enterprise Law and the Cooperative Law;

- Individual business households established and registering their business under the Government's Decree No. 109/2004/ND-CP of April 2, 2004, on business registration;

Shall be allowed to conduct activities of import, export, temporary import for re-export, temporary export for re-import, border-gate transfer, processing, purchase and sale agency under and within the scope set in Decree No. 12/2006/ND-CP without depending on the goods and business lines stated in their business registration certificates.

2. Pending the Government's decrees and concerned ministries' and branches' guiding circulars detailing the implementation of the Investment Law, the Commercial Law and the Enterprise Law, Vietnam-based branches of foreign traders and traders with foreign direct investment capital may conduct activities of import, export, temporary import for re-export, temporary export for re-import, border-gate transfer, processing, purchase and sale agency, and provide services of transit of goods according to current regulations.

II. GOODS BANNED FROM IMPORT OR EXPORT

1. Goods banned from import or export shall be those promulgated by concerned ministries or branches guiding the implementation of Appendix No. 01 on the List of goods banned from import and goods banned from export, promulgated together with Decree No. 12/2006/ND-CP.

2. The Trade Ministry shall promulgate the list and specify HS codes of used consumer goods and medical equipment banned from import in Appendix No. 01 to this Circular.

III. GOODS IMPORTED OR EXPORTED UNDER THE TRADE MINISTRY'S PERMITS

A. For exports

Quotas of textile and garment products to be exported to the US market (if any) shall comply with a Joint Circular of the Trade Ministry and the Industry Ministry.

For other markets, textile and garment products shall be exported by demands.

B. For imports

1. Goods subject to export control under international treaties or agreements which Vietnam has signed or acceded to

The grant of import permits for the ozone layer-depleting substances specified in Appendix I to the Montreal Protocol shall comply with the provisions of Joint Circular No. 14/2005/TTLT-BTM-BTNMT of July 11, 2005 of the Trade Ministry and the Natural Resources and Environment Ministry, guiding the management of import, export and temporary import for re-export of ozone layer-depleting substances under the Montreal Protocol on Substances that Deplete the Ozone Layer.

2. Motorized two-wheelers and three-wheelers with a cylinder capacity of 175 cm3 or more

The Trade Ministry shall grant permits for import of motorized two-wheelers and three-wheelers with a cylinder capacity of 175 cm3 or more to applicants on the basis of the Public Security Ministry's permission and in compliance with current regulations on import permit-granting procedures.

3. Sport guns and cartridges

The Trade Ministry shall grant permits for import of sport guns and cartridges under approving decisions of the Minister-Chairman of the Sport and Physical Training Committee.

4. Permits for import under the quota regime

4.1. The list of goods imported under quotas

DESCRIPTION OF GOODS

HS CODES

1

Salt

2501

2

Raw material tobacco

2401

3

Poultry eggs

0407

4

Refined sugar, unrefined sugar

1701

Volume of quotas shall be annually announced by the Trade Ministry.

4.2. Principles for permits granted under the quota regime

a/ Import permits shall be applied to enjoy the import tax rates within quotas for salt, poultry eggs, raw material tobacco and sugar (refined and unrefined).

b/ Goods items on the list of goods subject to the application of quotas and imported without the Trade Ministry's permits shall be subject to non-quota tax rates. Particularly for raw material tobacco imported for production of cigarettes outside quotas, the Industry Ministry's guidance shall be complied with.

c/ Quantity, volume and value of goods items on the list of goods subject to quotas and imported for production or processing of exports shall not be calculated into annual quota volume announced by the Trade Ministry.

4.3. Subjects eligible for grant of permits under quotas

The Trade Ministry shall grant import permits to the following traders that satisfy all conditions for import of goods on the list of goods subject to quotas, specifically as follows:

a/ For salt

Traders that wish to use salt in their production in compliance with regulations of the specialized management ministry.

b/ For raw material tobacco

Traders that have cigarette-producing permits granted by the Industry Ministry and the demand for use of a given portion of imported raw material tobacco for cigarette production with certification by the Industry Ministry.

Corporations engaged in major goods lines shall receive quotas for their member companies.

c/ For poultry eggs

Traders that have business registration certificates and demands for import of these goods items.

d/ For sugar

The import of sugar shall comply with annual guidance provided by the Trade Ministry after reaching agreement with concerned ministries or branches.

4.4. Procedures for grant of permits under quotas

a/ Basing itself on annual volume of quotas and the balance between import results and registered demands for quotas of traders, the Trade Ministry shall consider and grant import permits under quotas to traders defined in Section 4.3 above. A dossier of registration for quota to be sent to the Trade Ministry shall comprise:

- A registration form, made according to a set form (not printed herein);

- A valid copy of the business registration certificate.

b/ Traders shall produce the Trade Ministry's permits for goods import under quotas to border-gate customs offices when carrying out import procedures as well as the quantity of imports stated in such permits eligible for import tax rates within quotas.

c/ At the end of each quarter, traders shall send reports on import situation (made according to a set form, not printed herein) to the Trade Ministry.

Before September 30 every year, traders shall send reports (in place of the third quarter's reports) to the Trade Ministry, assessing the import capability for the whole year, proposing increase or reduction of assigned quotas or reporting on volumes of goods they are incapable of importing for the Trade Ministry to assign them to other traders.

IV. GOODS IMPORTED OR EXPORTED UNDER SPECIFIC REGULATIONS

In furtherance of the provisions of Article 10 of Decree No. 12/2006/ND-CP, the Trade Ministry guides in detail the following points:

1. Import of fuel petrol and oil

The import of fuel petrol and oil shall comply with the Prime Minister's Decision No. 187/2003/QD-TTg of September 15, 2003, promulgating the Regulation on management of petrol and oil trading, and relevant documents.

2. Import of used motor vehicles of various kinds

a/ Used motor vehicles of various kinds, including passenger cars, cargo trucks, pickups, special-use cars, shall be imported if they satisfy the condition that the duration from the year of manufacture to the year of importation does not exceed 5 years (for example, in 2006 only motor vehicles manufactured in 2001 onward may be imported). Other regulations shall comply with the guidance of the specialized management ministries. Particularly, the import of used passenger cars of under 16 seats shall comply with Joint Circular No. 03/2006/TTLT-BTM-BGTVT-BTC-BCA of March 31, 2006, of the Trade Ministry, the Transport Ministry, the Finance Ministry and the Public Security Ministry.

b/ It is prohibited to import right-hand drive means of transport, including those in knocked down parts or with converted hand-drive before being imported into Vietnam, except for special-use right-hand drive vehicles operating within confined areas, including crane trucks, ditch excavators, road sweepers and water sprayers, garbage and daily-life waste trucks, road construction machines, passenger buses used in airports and forklift trucks used in warehouses and ports, concrete-pumping vehicles, and vehicles used in golf courses and parks only.

c/ It is prohibited to import motor vehicles of all kinds which have their structures modified from their original designs, and which have their frame numbers or engine numbers changed by chiseling or modified in any circumstance and any form.

d/ Motor vehicles must not be knocked down when being transported and imported.

e/ Used ambulances must not be imported.

3. Import of assorted timber from bordering countries

Traders are allowed to import assorted timber from bordering countries without the Trade Ministry's permits. Particularly for raw-material timber, including log and sawn timber imported from Cambodia, the following regulations shall apply:

a/ Traders that have signed contracts on import or contracts on temporary import for re-export of timber with Cambodian traders that have been granted by Cambodia's Trade Ministry permits for export of raw-material timber shall send their applications for timber import or temporary import for re-export permits, enclosed with such contracts, to the Trade Ministry. The Trade Ministry shall grant import or temporary import for re-export permits to such traders after receiving permits for export of raw-material timber sent by Cambodia's Trade Ministry through the Cambodia-based Vietnamese Embassy or Trade Commission or the Vietnam-based Cambodian Embassy or Trade Commission.

b/ The transportation, delivery and receipt of imported timber shall be conducted at the following border-gates:

1. Le Thanh (Road 19)

2. Bu Po-rang (Road 14)

3. Bo-nue (Road 13)

4. Xa Mat (Road 22B)

5. Moc Bai (Road 22A)

6. Tinh Bien (Road 2)

7. Xa Xia (Road 17)

8. Vinh Xuong ' Thuong Phuoc (Tien river)

9. Khanh Binh (An Giang)

10. Bac Dai (An Giang)

11. Eastern Vinh Hoi (An Giang)

12. Western My Quy (Long An)

13. Vam Don (Long An)

14. National and international sea border-gates

4. Export of fertilizer, fuel petrol and oil imported largely with the State's balanced foreign-currency sources

a/ Traders that wish to export fertilizers originating from imported sources shall send their applications to the Trade Ministry for consideration and settlement. Directors of exporting enterprises shall have to ensure that exported goods are paid in freely convertible foreign currencies.

b/ Traders that have permits for import of petrol and oil shall be allowed to export already imported petrol and oil under the Trade Ministry's export permits and shall have to observe the regulation that exported petrol and oil must be sold at prices which are high enough to cover all import expenses and paid with freely convertible foreign currencies via banks.

5. Import of cigarettes and cigars

a/ The import of cigarettes and cigars for sale on the domestic market shall comply with the joint guidance of the Trade Ministry and the Industry Ministry.

b/ The import of cigarettes and cigars for sale at duty-free shops shall comply with the Trade Ministry's Circular No. 21/1998/TT-BTM of February 24, 1998, guiding the implementation of the Regulation on duty-free shops, promulgated together with the Prime Minister's Decision No. 205/1998/QD-TTg of October 19, 1998.

V. TEMPORARY IMPORT FOR RE-EXPORT, TEMPORARY EXPORT FOR RE-IMPORT, BORDER-GATE TRANSFER

In furtherance of the provisions of Chapter III of Decree No. 12/2006/ND-CP, the Trade Ministry hereby guides in detail a number of points as follows:

1. Traders that wish to conduct temporary import for re-export, temporary export for re-import or border-gate transfer of goods of all kinds which require the Trade Ministry's permits shall send their applications (made according to a set form, not printed herein) and reports on performance of temporary import for re-export, temporary export for re-import or border-gate transfer activities (made according to a set form, not printed herein) to the Trade Ministry.

2. Goods temporarily imported for re-export, temporarily exported for re-import or transferred from border-gate to border-gate shall go through customs procedures carried out at border-gates where exist customs offices according to current regulations. Particularly for the temporary import for re-export or border-gate transfer of goods items on the List of goods banned or suspended from import, banned or suspended from export, the customs procedures shall be carried out only at international border-gates, except where customs procedures are allowed by People's Committees of localities where exist border-gate economic zones to be carried out at border-gates within such border-gate economic zones.

3. Temporary import for re-export of petrol and oil shall comply with the Trade Minister's Decision No. 1752/2003/QD-BTM of December 15, 2003.

4. Temporary import for re-export of ozone layer-depleting substances shall comply with Joint Circular No. 14/2005/TTLT-BTM-BTNMT of July 11, 2005, of the Trade Ministry and the Natural Resources and Environment Ministry, guiding the management of import, export and temporary import for re-export of ozone layer-depleting substances under the Montreal Protocol on Substances that Deplete the Ozone Layer.

5. Goods temporarily imported for re-export, when being sold in Vietnam, must comply with the regulations on management of import and export and fulfillment of tax obligations specified by law.

VI. PROCESSING OF GOODS INVOLVING FOREIGN ELEMENTS

In furtherance of the provisions of Chapter VI of Decree No. 12/2006/ND-CP, the Trade Ministry hereby provides the following specific guidance:

1. Goods imported under assay permits and goods imported by mode of designation of importing traders by specialized management ministries defined in Appendix No. 03 to Decree No. 12/2006/ND-CP must not be processed for export for foreign parties. Particularly, the processing of goods items under the Health Ministry's assay permits shall comply with the Health Ministry's guidance.

2. Goods on the lists of goods subject to conditional business of the specialized management ministries shall only be processed for export for foreign parties by traders satisfying all the conditions set in specific regulations on production and trading of such goods.

3. The processing of textile and garment products for export to quota-regulated markets shall comply with the joint guidance of the Trade Ministry and the Industry Ministry.

VII. TRANSIT OF GOODS THROUGH THE VIETNAMESE TERRITORY

In furtherance of the provisions of Chapter VII of Decree No. 12/2006/ND-CP, the Trade Ministry hereby guides in detail a number of points as follows:

1. The transit of goods on the list of highly dangerous goods through the Vietnamese territory shall comply with the Trade Minister's specific decisions.

2. Transited goods of the People's Republic of China, the Lao People's Democratic Republic and the Kingdom of Cambodia shall comply with:

- The Trade Minister's Decision No. 0305/2001/QD-BTM of March 26, 2001, promulgating the Regulation on goods of the People's Republic of China on transit through the territory of the Socialist Republic of Vietnam.

- The Trade Minister's Decision No. 0938/2000/QD-BTM of June 30, 2000, promulgating the Regulation on goods of the Lao People's Democratic Republic on transit through the territory of the Socialist Republic of Vietnam.

- The Trade Minister's Decision No. 1732/2000/QD-BTM of December 12, 2000, promulgating the Regulation on goods of the Kingdom of Cambodia on transit through the territory of the Socialist Republic of Vietnam.

VIII. IMPLEMENTATION PROVISIONS

1. Assorted permits for goods import or export granted before the effective dates of Decree No. 12/2006/ND-CP and this Circular shall continue to be valid according to the valid terms stated in such permits or their extensions granted by competent agencies.

2. To annul the Trade Ministry's Circular No. 11/2001/TT-BTM of April 18, 2001, guiding the implementation of the Prime Minister's Decision No. 46/2001/QD-TTg of April 4, 2001, on management of import and export of goods in the 2001-2005 period.

3. To annul the Trade Minister's Decision No. 1311/1998/QD-BTM of October 31, 1998, promulgating the Regulation on business by mode of border-gate transfer and the Regulation on business by mode of temporary import for re-export, and Decision No. 2504/2005/QD-BTM of October 10, 2005, promulgating the Regulation on management of activities of temporary import for re-export and border-gate transfer of goods banned from import and suspended from import.

4. To annul previous stipulations which are contrary to the provisions of this Circular.

5. This Circular takes effect as from May 1, 2006.